UK student accommodation top investment asset for Malaysians

KUALA LUMPUR (Feb 24): Student accommodation in the United Kingdom (UK) is a top property investment choice for Malaysian property investors.

The number of investors is increasing even after the European Union (EU) referendum results, according to CSI Properties (Cornerstone International) in a press release.

“Throughout 2016, we saw a significant increase in the number of Malaysian investors interested in UK student accommodation. Our sales volume increased 60% compared to 2015; more than half of which are from UK real estate — an indication that Malaysian investors are taking advantage of the current favourable exchange rate following Brexit. Additionally, more than 65% of our UK real estate sales came from UK student property alone,” said CSI Properties spokesperson Virata Thaivasigamony.

“UK student accommodation has proven to be recession proof, outperforming other traditional asset classes during the economic downturn. We see it staying resilient through Brexit because of the ongoing demand for UK higher education, in addition to the weaker pound being more attractive to overseas students.

“Students are not going to say they don’t want to study in Oxford University or the University of Manchester just because the UK is no longer part of the EU. The demand for UK education has not diminished and it is reflected in the growth in student numbers in the UK in spite of Brexit,” Virata added.

At the start of the 2016/17 academic year, almost 522,000 students were enrolled on undergraduate courses at UK universities, an increase of more than 7,000 on 2015 while the number of acceptances of EU students rose by 8% y-o-y.

The UK student accommodation sector has grown by 37% since 2014, from £30.9 billion (RM172.47 billion) to £42.5 billion, making it one of the fastest growing asset classes in the UK property market. Supply is, however, still unable to keep up with demand.

Knight Frank has predicted that the purpose built student accommodation sector in the UK is set to reach a total value of £45.8 billion by September 2017 while rental growth of 2.5% is expected.

Asian institutional investors such as Mapletree Investments and GIC from Singapore have invested heavily in UK student property, with GIC’s most recent venture with Unite Plc in UK student housing costing the sovereign wealth fund a staggering £227 million.